The National Credit Union Administration (NCUA) has barred the former CEOs of U.S. Central Federal Credit Union and Members United Corporate Federal Credit Union from working for, or with, any corporate credit union due to their roles in two of the biggest credit union failures.Both credit unions went bust because of faulty MBS investments.
Francis Lee, the former CEO of U.S. Central, the one-time $52-billion central bank for credit unions, and Joseph Herbst, the former chief of $14-billion Members United, agreed to the bans.
U.S. Central and Members United were among five corporates that failed in 2009-2010 at an estimated cost of $16 billion to $20 billion to the credit union movement. The other failures were WesCorp Federal Credit Union, Southwest Corporate Federal Credit Union and Constitution Corporate Federal Credit Union.
The corporate bans are identical to one announced yesterday by Robert Burrell, the former chief investment officer at WesCorp FCU, and by the former CEO of CapCorp Federal Credit Union, the 1994 corporate failure.
Both orders, which bar the two corporate figures from becoming an employee of, holding any office in, or otherwise participating in any manner in the conduct of the affairs of any federally insured corporate credit union; consulting or advising any federally insured corporate credit union on any matters involving or relating to investment securities, investment policy, or investment strategy; or selling any investment securities to any federally insured corporate credit union; were part of the settlement of potential civil claims to be brought by NCUA.